ARLINGTON, Va., April 29, 2013 /PRNewswire/ — DRS Technologies, Inc., a Finmeccanica Company, announced today that it has been awarded a $15.5 million contract by the U.S. Army for an advanced targeting system. The cost-plus-fixed-fee, incrementally-funded contract by the U.S. Army Contracting Command, Aberdeen, MD is for the Engineering and Manufacturing Development phase of the Joint Effects Targeting System (JETS) Target Location and Designation System (TLDS).

The management, design and manufacture of these prototype systems will be performed at DRS facilities in Dallas, Texas and Melbourne, Florida with an estimated completion date in March 2016.

“The DRS JETS solution is the result of several years of innovation and development. We offer an integrated design that affordably improves soldier precision targeting capability,” said Mike Sarrica, President of DRS Network & Imaging Systems. “This award is a testament to the hard work and dedication of DRS team members to understanding our customer’s requirements and developing, qualifying, testing and producing a superior product.”

Systems delivered as part of the JETS program will provide the dismounted Forward Observer and Joint Terminal Attack Controller the ability to acquire, locate and mark for precision Global Positioning System-guided and laser-guided munitions. The TLDS component of this system will provide the dismounted Forward Observer with a common and light-weight handheld precision targeting capability.

About DRS Technologies
DRS Technologies, Inc. (DRS) is a leading supplier of integrated products, services and support to military forces, intelligence agencies and prime contractors worldwide. The company is a wholly owned subsidiary of Finmeccanica SpA (FNC.MI), which employs approximately 70,000 people worldwide. Within DRS, the Network and Imaging Systems (NIS) Group manufactures and supports advanced electro-optical sensor systems, and develops innovative networking capabilities that integrate these sensors in a broader tactical C4 environment. NIS operates in Dallas, Texas; Melbourne, Fla.; Cypress, Calif.; Huntsville, Ala.; Columbia, Md.; and the United Kingdom. For more information about DRS, please visit the company’s website at www.drs.com.

The U.S. Air Force is once again trying to attempt to buy a new aircraft to replace their MH-60 rescue helicopter fleet from the Eighties. The original CSAR-X program faltered twice earlier this century due to protests. Boeing (BA) had one the last contest with a version of the CH-47 but after protests from the losing bidders it was decided to start over.

The current Combat Rescue Helicopter program had put out a RFP for new proposals due in January. The goal is to buy just over 100 aircraft at a cost of $6.4 billion.

Unfortunately it was announced this past week that the only company interested in bidding on the contract is Sikosrky, part of United Technologies (UTX), teamed with Lockheed Martin (LMT). Sikorsky made the current HH-60 fleet. Other potential bidders including Augusta Westland, Eurocopter, Bell and Boeing believe that the cost goals will be too hard to meet for their products. Some have basically said the contract requirements were written in such as way so only a version of the UH-60 Black Hawk could meet them.

The Pentagon is obviously trying to reduce cost but at also at the same time promoting competition. Sometimes, as here, the two things don’t always work together as to attract bidders there must be some profit in it for them.

The Air Force has struggled with large acquisitions for a few years now. The new aerial tanker, KC-X, took 3 tries before Boeing won. The CSAR-X has already been discussed. They are currently redoing the Light Air Support aircraft contest after Embraer and Sierra Nevada’s win of the original contract was overturned on protest.

Whether they want to continue the current contest with limited bidders or try to re-do the requirements to attract more will be the next decision. They could just wait and see if more then one bid in January as originally intended.

Earlier this century the Pentagon started a program managed by the Navy and Marine Corps to replace the existing helicopters used to transport the President. Currently a mix of Sikorsky, part of United Technologies (UTX), made VH-3 and VH-60 aircraft are used. Some of them are now over 40 years old. It was felt that a new system was needed that was more efficient, capable and equipped with modern communication equipment. This was the VH-71 program.

The VH-71 planned to use an aircraft from Augusta Westland modified by prime contractor Lockheed Martin (LMT). The program was to proceed in two stages with a few aircraft bought early to test and integrate modifications. This proceeded with several aircraft purchased and modified. The problems arose as the requirements for the second effort changed considerably over time leading to schedule and cost growth. By 2009 the program was several billion dollars over budget and was cancelled by the Obama Administration as part of their defense reforms.

A draft RFP was released this week for the new program. It plans to save money and manage schedule by requiring the use of an existing, in production aircraft which will be modified. It is requesting that the bidders plan to minimize changes to expensive parts of the aircraft such as the power train, transmission, structure and rotor system. A communication system is being developed separately that will be integrated onto the new aircraft.

The VH-71 suffered as the requirements meant new major systems had to be developed and integrated to meet power, range and hovering capability requirements. The RFP is for 23 aircraft at a cost of just under $1 billion with the first ones entering service in 2020.

Currently teams made up of Sikorsky and Lockheed and Augusta Westland and Northrop Grumman (NOC) are interested. Boeing (BA) may propose after doing analysis as to whether their large CH-47 or V-22 tilt rotor aircraft may meet the requirements.

The VXX program is aggressive in that it hopes to contain cost, schedule and technical creep. As the VH-71 program indicated it may be hard to do this. With the expected defense cuts coming up the contract is very attractive not only due to its size but also the prestige. As with other large aviation programs the winner may also expect several decades worth of support contracts which could be worth billions.

SAIC (SAI) has been awarded a contract by the Japanese Maritime Self-Defense Force (JMSDF) to provide software system to aid in sea mine clearance operations. The JSMDF contract did not have a value reported but is related to the purchase of the Mine Warfare and Environmental Decision Aids Library(MEDAL) system along with training support.

The JMSDF operates Augusta westland AW101 helicopters for this mission. The varient they use is referred to as the MCH-101.

MEDAL provides a system to design mine clearance missions as well as evaluation and training support. It contains data on water depth, bottom characteristics, current as well as seawater physical properties. A discussion of MEDAL may be found in this paper from the Commission on Geosciences, Environment and Resources.

The Japanese has equipped their MCH-101 with a set of sensors to support mine warfare including side scan sonar, laser detection and acoustic minesweepers. Under the agreement with AW the aircraft are assembled in Japan and major components are manufactured there. Japan as a maritime nation does face a mine warfare threat as demonstrated by the U.S. in 1944-1945 with an aerial mining program.

The Indian government has been trying for several years to procure new helicopters for its Army and Air Force. Some of the attempts have failed due to contract issues including problems with corruption. The supplier base has also been expanded as India has changed its offset laws and made it easier for U.S. companies to participate. This has allowed contracts to be awarded beyond the traditional U.K. and Russian contractors.

Recently it was announced that Boeing (BA) would receive a contract for 15 CH-47 cargo helicopters and 22 AH-64 attack helicopters. This could be worth up to $2.4 billion for the Chicago based aerospace and defense contractor. The CH-47 have seen a great deal of use in Afghanistan due to its capability at high altitude. The addition of the CH-47 and Apache attack helicopters represents a significant improvement to current capabilities.

At the same time a contract for a new utility helicopter is facing cancellation. Augusta Westland, a Finmeccanica subsidiary was awarded a contract for 12 AW101 helicopters for VIP transports. Now this contract award is under investigation in Italy. As part of this it came out that an officer involved in the new tender which is now reaching the point of near award intervened on Augusta’s behalf to make the requirements more palatable. AW was eventually eliminated. Currently a Eurocopter and Kamov aircraft are in contention.

Because of the potential corruption in the process India might be forced to abandon it and try again. Augusta Westland also faces a ban on bidding on future contracts. This will lead to a delay in the delivery of the aircraft as well as limit those vendors. The VIP aircraft contract is currently planned to continue.

Corruption has historically been a problem with arm sales, especially those overseas. The U.S. has very strict laws governing it but not all country’s do.

Update – The Israeli Government stated that one of the main reasons they chose the M346 over South Korea’s T-50 Golden Eagle was that it provided better compatibility with the F-35 Joint Strike Fighter that Israel is buying. The T-50 was supposedly not in line with “international standards”. This gives hope to Alenia Aermacchi that other countries buying the F-35 might consider the M346.

The hard fought battle between Italy and South Korea over the new Israeli trainer came to a close yesterday with Israel choosing the Alenia Aermacchi M-346 advanced jet training aircraft. The contract could have a value of a $1 billion in the end. South Korea had offered their T-50 Golden Eagle indigenous developed jet.

Both countries had been going back and forth with Israel trying to develop offset deals that would be the most attractive to the Middle Eastern state. In the end Italy’s was more valuable to Israel although now they face South Korean anger and the potential for some lost businesses.

Offsets have always been a struggle with defense contracting with some countries demanding a great deal like Canada and this Israeli deal while others have had to cut back as India has done to attract more bids from large Western countries. In the case of Israel and Italy, and even South Korea, there should be no shortages of systems that the countries would like to buy.

Israel makes radars, tankers, UAV’s, missile systems as well as ground combat vehicles and other weapons that all could be considered by Italy. South Korea was hoping to buy tankers and other aircraft from Israel but now these deals may not happen or even be considered.

The C-27J Spartan is a twin engined light transport aircraft purchased for the U.S. Air Force from a team made up of L-3 Communications (LLL) and Alenia North America, part of the Italian defence and industrial group Finmeccanica. The C-27 is not only used by the U.S. but other countries across the world.

The C-27 was the result of a program originally called the Joint Cargo Aircraft (JCA) which was conceived by the Army as part of their plans caused by the decision to cancel the RH-66 Comanche helicopter in 2004. The Comanche was going to be a new attack and reconnaissance helicopter utilizing many new technologies to maximize its stealth and performance. In development for almost twenty years it finally had begun serious testing when it was cancelled. The money freed up was used to by systems like the UH-60M, the AH-64D Block III, CH-47F and UH-72A helicopters.

The Army suffered from a lack of internal heavy lift for intra-theater missions unlike the Marine Corps who possessed their own C-130 transports. The JCA was meant to add this capability and relieve the pressure on the rotary wing fleet primarily being used to carry cargo in Afghanistan and Iraq. Fixed wing assets would be more efficient and economical.

In 2007 the Army and Air Force selected the C-27 from L-3 and Alenia over bids by Raytheon (RTN), who had teamed with EADS North America, offering a Spanish made C-295 and Lockheed Martin (LMT) who proposed a C-130 version. An initial contract worth about $2 billion for 78 aircraft was awarded to the winners.

The JCA was made a joint program and it was originally planned to issue it to Army and Air Force National Guard units to operate. In 2010 the Obama administration decided to transfer the program wholly to the Air Force to manage and operate. The number of aircraft was potentially reduced and only the Air Force Guard would receive it.

There are now concerns that the C-27 program may be on the chopping block due to budgetary pressures. The Connecticut unit may be the first to feel this pain although the 2012 budget as submitted does contain the funding for the aircraft it may not make it into the final budget.

The C-27 is not a priority for the Air Force and new equipment for the Guard also sometimes takes hits. If the Air Force leadership is forced to sacrifice some of their funding it may be the C-27 is what is given up. It is also a small program and is primarily oriented towards non-combat missions at this time further making it easier to give up.

As the budget goes through these machinations over the next few years other programs similar to the C-27 may be on the chopping block. That does not mean they will be eliminated but they could see cuts, delays and changes to their size, missions and deployment plans. These programs will have to rely on the Congressmen and Senators who represent the states where they are made or based to protect them through trading of priorities and support.

The size of the cuts the Defense Department must make dictate that whole programs whether in development of production will have to be cut. The C-27 might just be one of them.

Foreign countries wanting to acquire United States weapon systems or technology have different avenues available to them. They may do a strait Foreign Military Sales (FMS) case where they contract through the U.S. Department of Defense with suppliers to provide the same or similar equipment that the U.S. is buying. Another option is to directly contract with a company to get a unique piece of equipment that in some cases has never been used by the U.S. military. Turkey has chosen this route with the announcement that they will buy over one hundred S-70 Black Hawk aircraft from Sikorsky Aircraft Corporation (SAC). SAC is a subsidiary of United Technologies (UTX) and is based in Connecticut.

The S-70 is the commercial market version of the UH-60 Black Hawk aircraft which is the core medium lift system for the U.S. Army while also being used by the Navy, Air Force and other U.S. government agencies. The Black Hawk has also seen robust FMS sales across the globe including users like Australia, various Gulf States and most recently Sweden.

Turkey’s contract is initially valued at about $3.5 billion. Like many Turkish defense programs the aircraft will have substantial portions of it built in Turkey in this case by Tusas Aerospace Industries. This will allow rapid expansion of the contract if Turkey decides as well as an option for them to make the aircraft for foreign sales themselves. SAC will provide parts, assemblies and technical assistance to help the Turkish production and assembly facility.

The S-70 has seen some sales to other countries as well as U.S. agencies. The T-70 will be equipped with specific Turkish equipment and modifications most likely to include the radio suite, armament and other equipment. By doing it this way Turkey does not necessarily limit itself to equipment that has been used on the UH-60 and qualified by the American government. At the same time, though, they lose some of the efficiencies of the large U.S. production contract with SAC.

Italy’s Augusta Westland, part of Finnemechanica (FNC:MI) , was also bidding on this contract.

Boeing (BA) has announced that for their entry into the new Presidential transport helicopter they will license and build the Augusta Westland AW101 aircraft. Augusta Westland of course is part of the Italian Finmeccanica (FNC:MI) group of companies. Lockheed Martin (LMT) had teamed with the overseas supplier on the canceled VH-71 program originally intended to replace the current fleet of VH-3 and VH-60 aircraft used to move President Obama and his predecessors around.

The VH-71 was canceled due to cost and schedule growth caused primarily by the massive increase of requirements once the original contract was let. The new aircraft was designed to take into account the changed threat since 9/11 and required complex communications and defensive systems as well as high performance requirements. This meant that the program to build less then twenty-five aircraft ended up costing billions of dollars.

The Navy plans to launch a new contest soon for this critical system. Lockheed this time around has already announced that they will team with Sikorsky rather then Augusta on their new proposal.

Boeing certainly has their own aircraft such as the CH-47 Chinook heavy lift helicopter and even the V-22 Osprey tilt rotor that could be used. It seems that this decision is being made because the size of the aircraft will be one of the factors considered. The footprints of the CH-47 and V-22 are much larger then a single rotor systems like the EH101 or the Sikorsky S-92 aircraft.

The twist of all this though is that Boeing has spent the last four years arguing that EADS‘ (EADS:P) participation in the new KC-X aerial tanker contract is not only bad for America’s economy and jobs but even for its security. It now seems a little ironic that Boeing is doing what Northrop Grumman (NOC) did for the last failed attempt at awarding this contract. Boeing even argues like EADS that the aircraft will be assembled in the U.S. thus creating jobs here.

It might be a little difficult for all of the “Buy American” Boeing supporters in Congress to swallow something like this. Lockheed and Sikorsky are able to make the same arguments that Boeing has done over the KC-X. Even in the complicated world of international defense contracting this move while it makes perfect sense may be a hard sell for the U.S. aircraft manufacturer.

In their markup of the 2010 Defense Appropriations Bill the House Armed Services Committee added money for continued production of the F-22. It also recommended that the Navy and Defense Department continue production of the Increment One of the VH-71 New Presidential Helicopter.

They feel that this would be the best use of the over $3 billion already spent on the program. There is obviously still a requirement for this aircraft and a new program is planned. The HASC wants the first group of VH-71 to be used as “the normal transport for the President…” with other systems looked at for the more stringent requirements. Right now the President uses VH-3 for short range, normal duties and then longer ranged CH-53 and UH-60 for other missions. One of the problems faced by the VH-71 was the attempt to buy one aircraft to do all missions.

Finemeccanica had offered to just deliver Increment One aircraft at reduced price for the total program. Of course these did not meet all of the requirements that the Navy had levied. This was a major reason the program’s cost and schedule increased so much.

So far the HASC markup does not necessarily agree with the Obama Administration’s proposals in the area of the F-22 or the VH-71. The bill still needs to go through the process of other committee markups, the full House and Senate and then the Conference. This means that this language may or not make it to the final version but it does show support for the VH-71 program.

Lockheed Martin had already cut over one hundred jobs at their Upstate New York facility in Owego. This was mainly due to the decision by Obama and Secretary of Defense Gates to end the VH-71 New Presidential Transport helicopter program. Even though the aircraft was made in Italy Lockheed did all the modifications and integration in Owego.

One of the arguments against ending this and other production programs is that they will just add to the joblessness during the current recession. Of course the defense budget is not really a jobs program and that is fairly poor reasoning to continue spending billions of dollars on a system that does not meet requirements. It is still possible that Congress will pass some form of spending that will keep pieces of the program alive in the 2010 defense budget but that will not be finished until the Fall.

WASHINGTON–(BUSINESS WIRE)–Citizens Against Government Waste (CAGW), the nation’s premier taxpayer watchdog organization, today expressed support for the continuation of the VH-71 Presidential Helicopter Program. President Obama included the program on the list of program terminations and reductions to the fiscal year (FY) 2010 budget, which he released on May 7, 2009 in a bid to whittle $17 billion out of his overall $3.6 trillion budget. The President had stated in February, 2009 that the helicopter he currently uses “seems perfectly adequate” and added, “I think it is an example of the procurement process gone amok. And we’re going to have to fix it.”

But even in his recommendation to terminate the program, Defense Secretary Robert Gates acknowledged that a new fleet of presidential helicopters is necessary due to the advanced age and technological limitations of the current fleet. In a post-9/11 world, there is broad consensus that the President should not be flying Vietnam-era technology.

“CAGW applauds the President’s desire to cut wasteful spending, but taxpayers are between a rock and a hard place on the helicopter issue,” said CAGW President Tom Schatz. “One of the most common axioms of aviation is that every takeoff is optional, but every landing is mandatory. The same could be said now about the $13 billion program to fund the new fleet of presidential helicopters.”

It has become increasingly clear that it won’t be as cost effective as it may have appeared to terminate the VH-71 program. More than $3 billion has already been invested in the program to cover the R&D and production costs of the first phase. Navy officials estimate that program termination and liability costs will be $555 million. Factoring in costs already incurred and shut-down fees, terminating the program now would leave taxpayers with nothing to show for nearly $4 billion – even though nine new aircraft have been produced that meet performance requirements. “This program is also another example of the rampant lack of realistic budgeting and absence of fiscal discipline in the Pentagon’s procurement process,” said Schatz.

More alarming, according to a recent memo prepared by House Armed Services Committee staff, the Navy has told Congress it will require billions of dollars to extend the life of the current fleet of presidential helicopters, which are already 35 years old, in order to keep them in operation for another decade until a new program can be devised. “In light of these facts,” said Schatz, “starting a do-over program from scratch would be even more costly than completing the current program – leaving the taxpayer to foot the bill twice rather than maximizing the current investment. Given the urgent security needs of the President and the massive amount of money that would be wasted should the Pentagon and the White House terminate the program at this late stage, the prudent course would be to move forward, take possession of the helicopters we have paid for, and find a responsible solution both for the taxpayer and the Office of the President.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.

Alenia Aeronautica Concludes Successfully The First Flight Campaign In Italy Of The Sky-Y Unmanned Aircraft

With five missions the Sky-Y, Alenia Aeronautica’s unmanned technological demonstrator, has completed its first series of tests in Italy. With this tests campaign the Sky-Y has to day accumulated three test phases, two in Sweden and one in Italy.

Thanks to the Permit To Fly granted by ENAC – Ente Nazionale per l’Aviazione Civile (National Agency for the Civil Aviation), the Sky-Y has accomplished this flight testing cycle in an area in the Puglia Region, defined for this purpose.

The test campaign in Italy of the Sky-Y, the only European-made unmanned vehicle to make flight tests and the only one equipped with European sensors and production systems, has taken place in March, and has allowed the testing of some automatic functions of the ground surveillance mission systems; these are key elements to fully assess the operational capabilities of the production machines which will have in the future to be used for this role.

In particular, the tests campaign has brought to continuing the carrying out of the tests on the EOST-45 electro-optical sensor of SELEX Galileo – started in Sweden in the 2008 Autumn – and on the real-time data transmission via satellite.

In detail, the satellite link made by Telespazio has been used to test real-time data and images transmission with the Civil Defence Agency, during missions which simulated ground surveillance, fire control, detection and monitoring of boats’ and crafts’ traffic and of signalling of possible shipwrecked persons.

The tests recently completed in Italy have concerned also the functionalities of advanced management of the EOST-45 sensor, through an On Board Mission Computer (OBMC) provided with a software developed by Alenia Aeronautica; among such functionalities: target’s automatic tracking, automatic scan of pre-defined areas, definition of the geographical coordinates of the surface target under observation, on land and also, for the first time, on sea.

Thanks to these tests Alenia Aeronautica consolidates its own continental leadership in the technological and operational testing of unmanned aircraft. Alenia’s UAV technological demonstrator’s flights so far made are 48, of which 29 accomplished by the Sky-X and 19 by the Sky-Y. Such successes have been made also thanks to the support and collaboration of other Finmeccanica companies like SELEX Galileo and Telespazio, proving once more synergies and integration capabilities of the Group’s companies.

Alenia Aeronautica, a Finmeccanica Company, is the largest Italian aeronautic player which operates world-wide in the commercial and military aviation, unmanned aerial vehicles and aerostructures. Alenia Aeronautica also coordinates the activities of Alenia Aermacchi and Alenia Aeronavali – wholly owned companies – respectively active in the design and manufacturing of military trainer aircraft and in the overhaul, maintenance and modification of military and civil aircraft. With its joint ventures ATR, SCAC and Superjet International, Alenia Aeronautica is the world leader in the regional turboprop market and a top player in the regional jet sector. Over 2008 Alenia Aeronautica reported revenues of 2,530 millions Euro, backlog for 8,281 millions Euro and orders for 2,720. The total workforce is 13,907.

The U.S. Army and Air Force plan to purchase about seventy-eight Joint Cargo Aircraft (JCA). This is a light transport to supplement the C-130 primarily used for short haul missions in theater. The C-27J was selected to be the aircraft for the mission. This is a jet built by Finmeccanica in a joint venture with L-3 Communications. The team had been in discussions with Boeing to build an assembly plant for the originally European aircraft in the U.S. Now Bloomberg is reporting that Boeing is dropping out of the program due to the current world economic downturn. The plan is still to build a plant and assemble the aircraft in the U.S. but a new partner will have to be found or L-3 will have to spearhead the work. The JCA has had its issues mainly due to the Army and Air Force having different priorities for the aircraft but it had settled down with Low Rate Initial Production starting.

The US Government’s Committee on Foreign Investment approved the planned acquisition of DRS Technologies by Italian company Finmeccanica. The deal is worth over $5 B and is structured as a stock purchase at $81 or so a share. DRS traded today at just over $80. DRS had long been rumored as an attractive takeover target, and the purchase by a European company again highlights their desire to get into the US Defense market.

DRS Technologies reported that sales were a record high for the last quarter. See an article here. DRS also reported a 40% increase in profits and a record backlog of over $1 B dollars. As discussed here, Finmeccanica has agreed to buy the American company. This would be one of the largest foreign acquisitions of an American defense company.

Bump – Fresh off good financial reports for the quarter, EADS is now looking at DRS Technologies as well. See an article here. This makes it sound like DRS might be a good buy.

As rumored this weekend Finmeccanica bought DRS today. The deal is for around $5 B. See an article here. This is the biggest acquisition so far by an European company. DRS has been an attractive take over target for a few years, one of the reasons its stock was so high. If this deal can make it through the necessary regulatory and legal review it will be quite stunning. Prior to this BAE and EADS had been doing smaller acquisitions, under a $1B. In today’s political environment due to the KC-45 deal and it being an election year it should be interesting to see Congress’s reaction.

This article discusses the idea that Finmeccanica, the Italian defense conglomerate, is looking at DRS Technology for an American acquisition. Like EADS and BAE the Italian company has been expanding its presence in the US. Its helicopter arm, Augusta Westland, won the VH-71 Presidential helicopter teamed with Lockheed Martin and is also trying to win the CSAR-X recompete post-protest. DRS which makes advanced sensors and electronics while providing SETA services has long been an attractive take over target. It’s stock though has done very well recently and for Finmeccanica to buy it would require a substantial investment. Read more